Current Business Trends: Bottoming Out

GRAND RAPIDS, Mich. — While it is too soon to say the greater Grand Rapids economy is in recovery, it is a reasonable bet that it has reached the bottom of the current slide for now, according to a survey compiled by Brian G. Long, director of Supply Management Research in the Seidman College of Business at Grand Valley State University.

The survey was conducted the last two weeks of April. The index of new orders, which tracks business improvement, was at +2, rebounding from a record low of -57 four months ago and in positive territory for the first time since January 2008.  The production index was -2, up from -7 the previous month. The purchases index came in at -21, an improvement from April's -42. The employment index was -14, up from -27.

"While the index of new orders has flipped to positive, all of our other statistics remain negative. That's why we're not yet to the point of declaring the beginning of a recovery just yet," Long said. "With the bankruptcy of Chrysler and the threat of bankruptcy looming for GM, we could be dealt another downward spike if too many of our local firms are negatively impacted."

Long noted that media reports about the national economy are talking about modest improvements, but that auto-heavy states like Michigan still have a hard road ahead. "It's worth repeating that the nation could pull out of the recession and still leave Michigan Mired in the same statewide recession that began two years ago," Long said. "But the economy on the west side of the state will continue to outperform the economy of the Detroit-Flint-Saginaw area."

The Institute for Supply Management, Greater Grand Rapids survey is a monthly survey of business conditions that includes 45 purchasing managers in the Greater Grand Rapids area and 25 in Kalamazoo. The respondents are purchasing managers from the region's major industrial manufacturers, distributors, and industrial service organizations. It is patterned after a nationwide survey conduced by the Institute for Supply Management. Each month, the respondents are asked to rate eight factors as “same,” “up” or “down.” An expanded version of this report and details of the methodology used to compile it are available at www.gvsu.edu/scblogistics .

Call Brian J. Bowe at (616) 331-2221 or e-mail [email protected] to arrange interviews with Long.

AUDIO CLIPS: Long says the worst may be over (audio clip ). He says moves by Chrysler and GM will impact Michigan's recovery (audio clip ). He says Michigan will likely take longer to recover than the rest of the country (audio clip ). He says while the west side of the state is doing better than the east side, the whole state is effected by the budget decisions in Lansing (audio clip ).